In this paper we study the relationship between earnings and education measured in
schooling levels. The main hypothesis to be tested is whether higher education levels reward
with higher earnings the working labour force in Albania. We use cross section data from the
Living Standards Measurement Survey (LSMS) of 2002 and develop a comprehensive
framework for our quantitative analysis of the private returns to schooling and private incentives
to invest in education. We construct estimates of the private return to each post-compulsory
schooling level, taking into account the effects of education on wages. We find that only tertiary
education provides significant positive returns with the upper secondary school being less
rewarded. This finding might explain the reduced incentives to invest in additional postcompulsory
schooling if this would not lead to tertiary.